EU unveils energy policy for the 21st century: towards a 'low carbon economy' with renewables

Just days after the dispute between Russia and Belarus affected oil supplies to Europe, the European Union's Commission presents its long-awaited new energy policy which must take the Union into the 21st century. The sweeping plan puts climate change and energy security at its heart, while aiming at boosting cross-border competition and cutting the Union's 'addiction' to foreign oil and gas. Energy and climate change will now also become the center-piece of all of the EU's foreign relations and international policies. The Russian oil spat fuels the case for a much hoped for common EU energy policy.

A 'new industrial revolution'
Today, the Commission put forward a series of energy reports and policy proposals, which it hopes will be a catalyst for "a new industrial revolution" that will "transform Europe into a highly energy-efficient and low-CO2 energy economy" by the mid-century.

"The days of secure, cheap energy for Europe are over," the EU executive arm warns in a Strategic Energy Review, which forms the centre-piece of the package. The official report [*.pdf] points to climate change, increasing import dependence and higher energy prices as challenges faced by all EU members and says "a common European response is necessary" to address them.

"With current trends and policies, the EU's energy-import dependence will jump from 50% of total energy consumption today to 65% in 2030," the Commission warns. By that time, it adds, dependence on gas imports will have increased from 57% to 84% and oil from 82% to 93%, making Europe increasingly vulnerable to major oil and gas producers.

The paper also points out that "energy accounts for 93% of carbon dioxide emissions" and therefore lies "at the root of climate change". And, despite current efforts to curb emissions, it predicts they will increase "by around 5% by 2030", leading the Commission to conclude that "the EU's present energy policy is not sustainable".

To address those challenges, the Commission proposes an Action Plan, to be implemented in the next three years. It calls on the European Parliament and on EU leaders to endorse the plan at the forthcoming summit in March. "The point of departure for a common energy policy must be combating climate change, promoting jobs and growth and limiting the EU's external vulnerability to imported hydrocarbons," the Commission says.

The objective should be a 20% reduction in greenhouse gases by 2020, something that should translate to around a 15% CO2 reduction compared with the Kyoto Protocol's base year of 1990.

The new EU energy strategy is based on three main pillars:

1. Accelerating the shift to low carbon energy
In its report entitelted the Renewables Energy Roadmap [*.pdf] the Commission proposes to maintain the EU's position as a world leader in renewable energy, by proposing a binding target of 20% of its overall energy mix will be sourced from renewable energy by 2020. This will require a massive growth in all three renewable energy sectors: electricity, biofuels and heating and cooling. This renewables target will be supplemented by a minimum target for biofuels of 10%. In addition, a 2007 renewables legislative package will include specific measures to facilitate the market penetration of both biofuels and heating and cooling:

Research is also crucial to lower the cost of clean energy and to put EU industry at the forefront of the rapidly growing low carbon technology sector. To meet these objectives, the Commission proposes a Strategic European Energy Technology Plan [*.pdf]. The European Union will also increase by at least 50% its annual spending on energy research for the next seven years.

At present, nuclear electricity makes up 14% of EU energy consumption and 30% of EU electricity. The Commission proposals underline that it is for each member state to decide whether or not to rely on nuclear electricity. The Commission recommends that where the level of nuclear energy reduces in the EU this must be offset by the introduction of other low-carbon energy sources otherwise the objective of cutting greenhouse gas emissions will become even more challenging (see the Draft Nuclear Illustrative Programme - *.pdf).

2. Creation of a true Internal Energy Market
The aim is to give real choice for EU energy users, whether citizens or businesses, and to trigger the huge investments needed in energy, as outlined in the policy proposal Prospects for the Internal Gas and Electricity Market [*.pdf]. The single market is good not just for competitiveness, but also sustainability and security:
biomass :: bioenergy :: energy :: sustainability :: renewables :: biofuels :: low carbon economy :: climate change :: energy security :: geopolitics :: energy efficiency :: European integration :: European Union ::

The competition sector enquiry and the internal market communication show that further action is required to deliver these aims through a clearer separation of energy production from energy distribution. As indicated in the policy document entitled the Priority Interconnection Plan [*.pdf], it also calls for stronger independent regulatory control, taking into account the European market, as well as national measures to deliver on the European Union's target of 10% minimum interconnection levels, by identifying key bottlenecks and appointing coordinators.

3. Energy efficiency
The Commission reiterates the objective of saving 20% of total primary energy consumption by 2020. If successful, this would mean that by 2020 the EU would use approximately 13% less energy than today, saving 100 billion euro and around 780 tonnes of CO2 each year.

As outlined in the Strategic Energy Technology Plan [*.pdf], the Commission proposes that the use of fuel efficient vehicles for transport is accelerated; tougher standards and better labelling on appliances; improved energy performance of the EU's existing buildings and improved efficiency of heat and electricity generation, transmission and distribution. The Commission also proposes a new international agreement on energy efficiency.

The proposals centred on these three pillars will need to be underpinned by a coherent and credible external policy.

An international Energy Policy where the EU speaks with one voice
The European Union cannot achieve its energy and climate change objectives on its own. It needs to work with both developed and developing countries and energy consumers and producers. The European Union will develop effective solidarity mechanisms to deal with any energy supply crisis and actively develop a common external energy policy to increasingly "speak with one voice" with third countries. It will endeavour to develop real energy partnerships with suppliers based on transparency, predictability and reciprocity.

Drawing on the consultation process on its Green Paper issued in 2006, the Commission has already made progress towards a more coherent external energy policy as demonstrated by the creation of a network of energy security correspondents. The Commission proposes a whole series of concrete measures to strengthen international agreements including the Energy Charter Treaty, post-Kyoto climate regime and extension of emissions trading to global partners and further extend bilateral agreements with third countries so that energy becomes an integral part of all external EU relations and especially of the European Neighbourhood Policy. As major new initiatives the Commission proposes to develop a comprehensive Africa-Europe partnership and an international agreement on energy efficiency.

Concrete action is required urgently. Taken together, the sector enquiry, strategic review and action plan represent the core of a proposed new European Energy Policy. This process seeks to move from principles into concrete legislative proposals. The Commission will seek endorsement of the energy and climate change proposals during the Spring European Council and will come forward with legislation in light of these discussions.

More information:
Directorate-General for Energy and Transport: Energy for a Changing World, press pack - contains all sub-reports and policy proposals; full reports and layman versions.
European Commission: official communication: An Energy Policy for Europe [*.pdf], Jan. 10, 2007.
EU Rapid Press: Commission proposes an integrated energy and climate change package to cut emissions for the 21st Century - Jan. 10, 2007
EU President José Manuel Barroso: Energy for a Changing World, Jan. 10, 2007.
Euractiv: EU to unveil plans for 'energy industrial revolution', Jan. 8, 2007
Euractiv LINK DOSSIER: Green Energy Paper: What Energy Future for Europe?